Administrative
Report
H.12., File # 25-0206 Meeting Date: 2/18/2025
To: MAYOR AND CITY COUNCIL
From: GREG KAPOVICH, WATERFRONT & ECONOMIC DEVELOPMENT
DIRECTOR
TITLE
APPROVE THE OPTION AGREEMENT BETWEEN THE CITY OF REDONDO BEACH AND LGW
INVESTMENTS, LLC TO ENTER INTO A NEW LONG-TERM LEASE OF THE PORT ROYAL
MARINA FOLLOWING COMPLETION OF THE IDENTIFIED PROPERTY IMPROVEMENTS
EXECUTIVE SUMMARY
To provide for the redevelopment and revitalization of Port Royal Marina (Marina), this Option Agreement allows the City of Redondo Beach (Optionor) to grant LGW Investments, LLC (Optionee) the option and right to enter into a new long-term lease of the Marina, subject to the Optionee’s completion of the established criteria to redevelop the property. If the Option Agreement is approved and the Optionee completes all improvements listed in the redevelopment plan within the Option Term period, the item will return to City Council to exercise a new 50-year lease. It is recommended the Council approve the Option Agreement, which will enable much needed enhancements to the Marina that will better serve Marina users and sustain critical Harbor Tidelands lease revenue to the City for many years to come.
BACKGROUND
LGW Investments, LLC is the current leaseholder of the Port Royal Marina which was executed on April 17, 1961 (Lease) and is set to expire on April 16, 2031. The Port Royal Marina leasehold occupies the eastern portion of the area within Basin Two of King Harbor and consists of 336 slips.
If the Option Agreement is approved by City Council, the City will grant to LGW Investments, LLC the option and right to enter into a new long-term lease of Port Royal Marina, subject to the Optionee’s performance of established criteria relating to the implementation of the agreed upon redevelopment plan for the Marina. The criteria are listed below and included in Exhibit B:
· Docks
o Replacement of docks in-like-kind and size
· Parcel A - North
o Relocation of light poles
o Restriping of parking spaces
o Construction of a new restroom building
o Trenching of drain against the retaining wall
o Relocation of ramp and new steps
H.12., File # 25-0206 Meeting Date: 2/18/2025
o Shifting of the electric transformer, ramp, FDC, and trash enclosure o Removal of existing planters and landscape area to be replaced with a 12’ wide boardwalk
· Parcel A - South
o Relocation of light poles
o Restriping of parking spaces
o Shifting of ramp and steps
o Trenching of drain against the retaining wall
o Shifting of the utility cabinets, electronic vaults, ramps, FDC, and trash enclosure o Removal of existing planters and landscape area to be replaced with a 12’ wide boardwalk
· Parcel B
o Removal of existing building to allow for additional parking The value of the implementation of both waterside and landside improvements listed above is estimated at a minimum of $14,000,000. All costs associated with the design, permitting, and construction of the improvements will be paid by the Optionee. The Optionee will be required to submit an entitlement application to the City of Redondo Beach and receive permits and approvals from all applicable government agencies (which includes the CA Coastal Commission) by January 1, 2031 in order to be eligible for a new 50-year lease. To continue the redevelopment and revitalization efforts of the waterfront, it is recommended the Council approve the proposed Option Agreement.
COORDINATION
The Waterfront and Economic Development Department coordinated this item with the City Attorney’s Office. The City’s contracted real estate attorney for specialized matters prepared the proposed agreement.
FISCAL IMPACT
Approval of the Option Agreement does not have an immediate financial impact on the City.
Completion of the identified improvements in the Agreement however will lead to an estimated $14M of reinvestment in the Harbor and allow the City to maintain critical Marina lease revenue for many years to come.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
· Proposed Option Agreement
· Form of Memorandum of Option Agreement
· Exhibit A - New Lease (Draft)
· Exhibit B - Scope of Development